GBPJPY Downtrend Channel (Jun 14, 2017)
GBPJPY just bounced off its channel support again and could be gearing up for a correction to the resistance at the 141.50 minor psychological mark.
If this keeps gains in check, the selloff could resume back to the swing low or to the channel support at 138.00.
The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA is edging close to the channel resistance, adding an extra barrier in case a pop higher happens. Stochastic is still pointing up to show that buyers are in control of price action for now.
The UK just printed stronger than expected CPI, allowing traders to speculate that the BOE statement later in the week could be more hawkish. In addition, headlines are showing that the UK government may have already struck a coalition with the DUP to have a more stable front in next week's Brexit talks.
Meanwhile, Japan's BSI manufacturing index fell from +1.1 to -2.9 instead of improving to the projected +1.5 figure. The revised industrial production report is due next and an upgrade from 4.0% to 4.1% is expected. The FOMC statement could also influence yen price action indirectly as dollar demand is usually negatively correlated.
By Kate Curtis from Trader's Way